‘Essential’ postal operators overcome pandemic but big challenges ahead

Postal operators have proven themselves “essential” during this year’s COVID-19 pandemic but face big challenges such as expanding parcel capacity and fixing the ‘broken’ international postal network, top executives told the Parcel + Post-Expo online conference yesterday.

The world’s posts successfully responded quickly to operational restrictions, maintained essential delivery services and coped with an unexpected surge of e-commerce parcels as shops closed and many consumers switched to online shopping, Peter Somers (CEO Emirates Post) and Christine Holgate (CEO Australia Post) both emphasised in a Postal Leaders session.

Broken air network is ‘huge risk’ for postal operators

Peter Somers highlighted how the pandemic had turned parcel delivery “from a commodity into a value-added service” as governments recognised last-mile deliveries to residents as a “vital sector”. Emirates Post’s volumes “doubled in the last six months”, he noted.

Emirates Post itself responded with extensive safety measures for staff and customers, including full contactless delivery “to guarantee optimal safety and security” for recipients, while it also introduced various new services, he pointed out.

The postal industry as a whole, however, had faced major challenges of capacity, volumes and cross-border operations this year, the Emirates Post CEO said. Posts had needed to scale up delivery capacity rapidly in response to soaring parcel volumes, while cross-border operations had been “almost impossible” in first few months of the year as passenger flights were grounded on a massive scale.

“We all depend on the airline industry for the cross-border shipping of our mail and parcels,” Somers told conference participants. For the postal industry, which largely relies on bellyhold aircraft capacity for international transportation, the fast-changing airline environment is “a huge risk”, whereas FedEx, UPS and DHL “have their own fleets and have not been out of business”, he commented.

Displaying an image of a UPU-branded aircraft, Somers declared: “We need industry collaboration to prevent a broken or insufficient global supply chain, allowing us to cope with the increase in e-commerce volumes.”

Asked about the main lessons from the pandemic, the experienced international postal executive said postal operators had learned to take fast decisions and become “agile” in the face of accelerated change, while they had been accepted as a vital sector for national economies and societies. “The pandemic shows that posts are here to stay,” he declared.

Looking ahead, Somers was confident that the current e-commerce boom would continue and said Emirates Post will invest in further capacity expansion to ensure it has sufficient free capacity to use at short notice if necessary in future. In addition, it will continue to extend home deliveries while introducing many more collection points in the next two years.

At an international level, however, Somers claimed that “the global postal network is broken” due to the massive lack of air capacity amid the global crisis in the airline industry.

“It’s a big issue that the UPU needs to address and take action on,” he urged. “We should cooperate with airlines. There should be an agreement for minimal service for postal companies to connect,” he underlined.  

‘Five years of growth within months’

For her part, Christine Holgate hailed the “incredible challenges, great pride and achievements” of the past few months as Australia Post proved itself to be “the delivery arm of the nation” during the pandemic.

In terms of parcel volumes, “we had five years of forecast growth in a matter of months,” she declared. Australia Post-branded parcel volumes soared by 54% between April and September, for example.

However, the postal operator had needed to rebuild its network “overnight” as airline partner Qantas grounded passenger flights and had responded by chartering freighters, which drove up operating costs. In addition, posties who were used to delivering small light letters had to be retained to deliver heavier and bulkier parcels.

For Holgate, the main lessons from the pandemic have included the need for “quick bold decisions”, and operational changes such as new technology and staff retraining to handle heavier parcels.

Looking ahead, she, too, had no doubt that the e-commerce boom will continue for the foreseeable future. “It’s definitely a permanent change…My money is on strong growth,” she emphasised. “For us it will be critical that we build extra capacity so that we can deliver to our customers.”

Holgate concluded: “We have come through stronger, we have learned a lot of lessons but there are still big challenges ahead. Overall, I’m very excited about our prospects.”